Breaking Down the Beer Industry's Evolving Spheres of Influence

Speaker 1 [00:11] The power structure in the brewing industry is constantly shifting and evolving. This year it's been on display with some of the largest CPG companies in the world dipping their toe into Bev Oc, and not just with products, but distribution. Our next speaker, a consultant and a dealmaker, is here to update us on these evolving spheres of influence. Please welcome JB Shireman to the stage from Arlington Capital Advisors.

JB Shireman [00:50] All right. You guys hear me OK out there? All right, good. Uh, hey, Justin, thank you for that, uh, introduction. Uh, as he told you guys, uh, my name's JB Shireman. I'm with Arlington Capital. Uh, for the record, I am not an investment banker. I do, uh, I do work with some very talented ones, and what I'm about to say next falls under the brief heading of things our lawyers made me say. Presentations, I quote, Presentations and public appearances content are informational and should not be considered as publicized investment advice or recommendations. The information discussed today represents my very own ganja-soaked perspectives and are provided by Arlington Capital Advisors or its affiliate Arlington Capital Services LLC member FINRA. All right, we covered that base. All right. Good. All right, well, look, uh, speaking of not being a, uh, a banker, uh, hell, I didn't even graduate college. I went to, uh, Colorado State University in Fort Collins 3 times, and they politely asked me to not come back the third time. Um, indirectly or, or maybe more directly because of beer. Certainly didn't, uh, being able to legally drink at 18, uh, really didn't help my cause. I felt, uh, a little bit vindicated over 20 years later when they invited me back to, uh, actually help write the curriculum for the Beer and Beverage Institute Insight program, which was part of their graduate School of Business, and I actually delivered, uh, one of the first commencement addresses to that group, which was pretty funny, having been kicked out of the college, uh. But I am not a banker. I am a strategist and a uh a long time advisor in the beverage space, and for a pretty long time, I've looked at the world through the lens of total, total beverage, even though the vast majority of my experience has been around craft beer. Um, this is my first time to speak at uh Brew Baum. And I was asked to, I don't normally talk about myself. I try and talk about the industry a lot, but I was asked to give a little more background on myself than normal, since a lot of you guys aren't directly out of the beer industry. Uh, so just bear with me for a couple minutes here. Next year will mark my thirty-fifth year in the beverage industry. For those of you who do know me, know I was born and raised in LA, and that stands for Lower Arkansas. Um, I don't use proper English, and I am prone to dropping F-bomb, so buckle up. I, I found my way to Fort Collins in, uh, May of 1987, and I found work at the oldest continually operating business in the city and the smallest bar in the state of Colorado, where I had the pleasure of being the very first on-premise account for New Belgium, the first on premise account for Odell. We used to bootleg Pierre Seles'elis white up from Texas, and my first three beers I had on tap were Coors Banquet, Paps Special Dark. That's a nice one. And, uh, and Buffalo gold from Boulder beer. Uh, so at that time there were no craft breweries in Fort Collins, and now craft breweries, dispensaries and distilleries outnumber Starbucks and McDonald's by a factor of like 10 to 1. So it's safe to say that we've seen some changes there over the years. In 1995, I went to work for New Belgium as employee number 26. We only sold in Colorado and Wyoming at the time. I helped them open, 27 states. I appointed about 250 wholesalers and ran everything that wasn't production, so sales, marketing, branding, distribution strategy, field quality, co-founded the Tour de Fat, which became the largest bicycle parade in the world, and also served on our board of directors. I left there in 2008, and I started my own consulting company called Craft Centric, and I was working with a guy named Bill Anderson out of uh Los Angeles who had served on a board with, and he had a group called First Beverage, and in 2011, after doing some consulting with him. I folded my consulting company under the umbrella of First Beverage, and we rightfully predicted then that there was gonna be a tremendous amount of M&A in the craft beer space, even though it took us three more years to get our first deal done, which was Boulevard and Duval in 2014, and that brought the first European investment money into the US craft beer space, and that really broke the dam. We followed that up with 5 deals with ABI, 4 with MillerCoors. We did the Firestone, another deal with Duvil with them. We did a deal with Karen and brought the first Asian money into the US market. We did a deal with ABV artisanal brewing ventures, and brought the first family office money in, and we participated in one of the first craft on craft acquisitions with the roll up of Brooklyn 21 a.m. Funk Works. And interestingly enough, we also did the first transaction in the seltzer business when we sold Spike Seltzer, which is now Bon and Vin to ABI in 2017. Uh, there was a fundamental change in the business model at First Beverage, and Van Russell asked me to join Arlington Capital. I joined them in 2018. I really like the three legged, I think three legged stools are very strong and very stable, and I liked that Van was focused on the entire beverage sector, particularly spirits and cannabis, which I was anxious to get into. He had a great restaurant practice and multi-unit franchising, so those things played together very well. And with our team at Arlington, we've continued to put some nice points on the board. We did another deal with Molson Coors. We represented Dogfish Head in their deal with Boston Beer. We represented New Belgium in their deal with Lion Karen. We did the first US craft cannabis crossover with the Sweetwater of Frea, which is now Tilray deal. And then earlier this year, we did our first Beyond Beer deal with Lone River Ranch Water and Diageo. And then most recently, for those of you here yesterday afternoon, we did represent Bells. In that transaction with Lion Karen in New Belgium, which is not yet closed, so we're very, very active in the US, but we're also active globally, and we really look at the world through a global lens. Uh, we've done work in the Asia Pacific Rim, South America, and we're in the process of opening up an office in the EU, uh, in London. So again, for many, many years we've looked at this world through the lens of total beverage. So thank you for bearing with me for that introduction there. Raise your hands if you predominantly generate your revenue through beer. OK. How about seltzer? About wine-based products. About spirits-based products. Great, so a good mix across the board. The reason I say that is I want you guys to take a little mindset adjustment here with me. Um, and I'll just use craft beer as an example. I, I get these just dumbfounded looks when I speak to an audience of craft beer people, and the first thing I tell them, I said, none of you guys are in the craft beer business. Not one of you are in the craft beer business, and the whole room is full of craft beer people. And I said, all you guys do is make and sell beer to compete in an ever changing global beverage business, and This is a universal truth, I think, for all participants in the beverage industry, and I think it's a cardinal point to keep in mind when you start to do your mid and long long range strategic planning. Uh, and as with all consumer packaged goods, you know, you are susceptible to many external forces, and some of these forces are obvious and some are less obvious, but what I believe we've learned to be true over the years is those people who view themselves in isolation of those external factors will sooner or later find themselves deeply out of touch and unable to compete effectively in a rapidly changing environment. Uh, I think this is a universal wisdom that holds true all the way from the geopolitical arenas to the neighborhoods that you compete for share in, uh, every day. As a firm, we encourage our clients to try and deeply understand everything that's going on around them, and even if we think it may not have anything to do with you, but to pay attention to it and take all of that information and use it to compete more effectively. So, I was asked to talk about like where we are today in the industry, and I don't think we can really understand where we are today until we get clear about where we've been, OK? So, this is a little metaphor for the times. I wanna, I wanna read you guys a quote here. Says, as with all aggressive actions, there will very likely be an equal to or greater reaction at some point. This craft train has been moving at a torrid pace for a decade plus. Faster, bigger trains cause bigger pileups and create exponentially more wreckage to sort through. I definitely would not want to be in the middle seats when this thing derails. The overall weight of the heavy engines in the front greatly stacks the survival odds in their favor. The trailing cars and caboose may have time to unhitch before it careens over the edge. Those in the middle seats will likely get crushed. I don't know exactly when or how this will happen, but I truly believe we're inevitably headed towards some seismic shifts in consumer behavior and the beverage companies that serve them. That's an excerpt from a speech that I gave on January 25th of 2020, 5 weeks before the world shut down, and little did we know then how true that was about to become, and there were really there are a number of factors, but I, for the sake of our talk today, I, I have identified 12 of them that I believe really informed our thinking to say what we said then. And we're gonna walk through them, and we're gonna talk about what was going on then and what's happening with them now. So, this is, this is the 12 kind of influencing factors pre-COVID. One, spirits was booming, and it had been for quite a while, right? Number 2, traditional beer, which we think of like premium, sub-premium, and light beer, have been shedding volume and accelerating that share loss for quite some time. Number 3, craft beer was getting saturated, and it was starting to plateau. We've been opening at a rate of 2 a day for quite some time. It was not sustainable. Number 4, there was a lot of industry infighting around who owned the word craft, right? Number 5, cannabis was on the horizon and gaining momentum. Number 6, distributor consolidation was a monthly distraction for many of you. Number 7, Seltzer was taking hold in ways that few of us thought were possible. Number 8, the Better for you movement was taking hold across all sectors of CPG, particularly beverage. Number 9, RTDs were on the rise. Number 10, direct to consumer was exploding across all sectors of CPG, not just food and household items. Number 11, consumers were gaining momentum, and they were more in command than ever, and by that I mean, they were starting to lead beverage where they wanted it to go, not where other big players wanted to lead them. They were leading instead of being led. And the last one, all of this was causing a severe blurring of the lines between spirits, wine and beer, particularly in the mind of the consumer, which is really the only place that it matters to all of us, or it should matter to all of us. This trend led many large, very powerful, very well capitalized companies to try and leverage this opportunity, thereby causing this plethora of new products that didn't quite fit the mold of the past, right? Consequently, this put federal, state, and local authorities on notice as to how they were gonna manage these, how they were gonna tax them, where they were gonna allow them to be sold, and everything. So in summary, those 12 seemingly isolated things were absolutely affecting our industry, right? And the summation of that is, I think we were losing our ability to predictably forecast accurately, and on a much more serious note, a lot of us were in danger of losing our relevancy to our consumers. And then what happened? COVID hits, right? And the world shuts down. I call COVID an unprecedented trifecta, and the reason I use the word trifecta is the physical impacts of COVID are obvious, right? Millions of people have died, and sadly, I think many more are going to. In addition to the physical impact, a lot of people were suffering mental strain, anxiety from social isolation, trying to figure out how to educate their kids, how to make ends meet, um, or perhaps a combination of all of those things. And number 3 is just the sheer economic toll. In 2020, we learned it was much easier to freeze an economy than to fall an economy, and between March 6th and March 19th, the vast majority of the global economy came to a screeching halt. And when you do that, and the two largest closed down, the US and China, within a week of one another, we realized just how interdependent our supply chains are on one another, and how much the rest of the globe was dependent on those economies being open for business and being healthy. You know, it takes us to today, despite 3 FDA approved vaccines, you know, boosters approved, kids are approved, uh, you know, we still have, uh, cases on the rise in many places, you know, and this is due to the Delta variant, now the most latest, this Omicron, which they just announced a couple of hours ago, has finally made its way to California. I don't know if you guys heard that this afternoon, um. The point of saying all this is the vast majority of this population is a long way from the way it used to be, and I don't think it's going back to the way it used to be. I think we're entering a phase of a new normal, and looking back on 2020, I think it was so stunning to all of us that what was going on. That simply by surviving it and getting through it and rolling the calendar over to 2021 and having these vaccines, I think we felt like we just had to be in a better place, and I wish that were the case, and I think we're coming out of it, but like I said, we're a long ways cause look at 2021. Climate change brought, you know, to this state alone, some of the worst and historical wildfires we've ever seen. We had civil unrest surrounding George Floyd. Uh, across the entire country, we had the Me Too movement, we had an assault on our democracy that left us with a deeply divided electorate, and guess what, folks? COVID is still here, and it's still out there. Um, so these are truly unprecedented global events, you know, you can't make this shit up. There's an old saying that reminds me of too many clowns, not enough tents, you know, it's it's like there's just chaos out there, and we gotta find our way through it. And there's an old saying that we use, it's like, we have to learn to play the ball where it is, not where we want the ball to be. We all wish we could move the ball and change things and wish we could, we could make it be some other way than it is, but it is where it is, and it's hard to underestimate all of this, and COVID, the collection of those three trifecta pieces of COVID. They either accelerated or greatly influenced all 12 of those points that I just pointed out, and this isn't a new idea. Many people have said this, but I think you need to think about COVID and the 2021 year that followed. That was an accelerant on a fire that was already lit, right? Now, the good news is, is whether it be for strategic reasons or for sheer economic realities, COVID provided all of us a lot of air cover, if you will, to retool our businesses in any way we thought possible to live to fight another day, and for the most part, our consumers continued to support us, and many of these changes were overdue, um. Other good news here and pardon the pun, uh, but no one is immune from the combined effects of this economically and strategically it's affected all of us, it continues to affect all of us. There was no playbook. The truth is there still ain't, and nothing but like hard won ingenuity and on the job training is gonna get us through this, but the good news is we are all in this together and we will come out the other side of it. So, where are we today? When I talked to Justin about this, about a title, it's like, you know, 2021, what the fuck? You know, it's kinda how it seemed. It's like, Jesus, I didn't know what else to think about it, you know. Um, but look, let's go back to 0.1 spirits. You know, spirits has continued to accelerate. I think that's largely driven by consumer preferences and large spirits guys diving into their own RTD branded products, and these spirits guys, I'll tell you, they're very bullish on the category, but they're also very bullish on themselves. Traditionally, they're much more aligned legislatively, they're more streamlined. Than beer in other parts of the beverage world through discus, as opposed to you think about MBWA and the Beer Institute and the Brewers Association and all these local state guilds, you know, it's a lot of people to get on the same page, and I think in many ways, the spirits guys feel like they have traditional beer on the ropes, and I don't think they're gonna let up. I think that'll continue. Uh, let's talk about traditional beer for a minute. That premium and sub-premium and light category, it continues to bleed off millions and millions of barrels, and for quite a few years, until just a couple years ago, a lot of that was going into craft, and now there's so many more offerings, and I think that's what caused that slowdown of craft. Jim Cook, one of the smartest people in the industry, referred to it as the leaky bucket. Years ago, it's like dripping out this bucket, and if I can just catch a cup full, that's enough to run my business. Well, now there's a lot of other cups under that bucket, right? Trying to catch that. and Bart Watson, another brilliant guy, he's an economist for the BA, he talked about this recently, so I'd like to attribute both of those guys. Those were not my ideas, but I agree with them, uh, wholeheartedly. Um. You know, we'll talk about more of the splintering of beverage when we talk about uh better for you and RTD in a minute, but I just wanna throw a couple of statistics at you that I heard at Ben Simon's conference in New York last week. You know, premium. Beers like Bud, regular Bud, Coors Banquet, uh, things like that, it's still just north of 25% of all the malt beverage in the US today, but it's down almost 9% year to date. So all of those premium, sub-premium and light brands are about 25% of the category down 9%. In 2000, OK? Bud and Bud Light alone, just those two brands, were over 30% of all the malt beverage in the country. That just gives you some sense of that share shift in a couple of decades' time, and it's done nothing but accelerate. Um, alright, let's talk about craft beer for a second. You know, the shutdown pretty much, uh, put a screeching halt to that 2 a day opening business, and the vast majority of the nano brewers, you know, have once had kind of a golden model, you know, they owned their own on premise, they did their own off-premise, they self-distributed, they had a very small footprint to operate in, and look how quickly the world threw them a curveball and turned that whole. Situation on its head, whereas you take the larger crafts that had national footprints, they've kind of been struggling a little bit under the weight of 8000 nano brewers, when those guys that had deep chain penetration and even deeper pockets to invest, they fare better than most people in COVID. And I think if any really good news has come out of all this, is I don't think anyone doubts, certainly. Certainly not Arlington Capital and my coworkers and myself, that craft beer is going anywhere. Craft beer is, I, I think is gonna continue to be incredibly healthy. It's gonna be largely driven by the expansion of the IPA category, which could be sessionable IPAs, low cal IPAs, no alcohol, IPAs, all IPAs, um, craft lagers and the exploration of the NA category. I think most people think it's gonna settle out to somewhere between maybe 15 to 18% of the national share of liquid. It's gonna be higher in dollars than that, and it's gonna skew much higher in certain regions of the country than that. But either way you cut it, craft is an absolutely significant and important part of total beverage, and it can't be ignored by anybody out there anymore, whether you're in the seltzer business, wine business, spirits business, big guy, little guy, whatever, better pay attention to craft. The 4th point that we talked about was the infighting around the use of the word craft, and that largely seems to have waned, and I think a lot of the reason is because the BA, the Brewers Association, had largely been the ones leading that fight. And COVID, unfortunately, has been particularly unkind to them, as they lost revenues over the craft brewers conference and the World Beer Cup and the GABF, which led to a shakeup and things like that, and I don't wanna see anybody's business suffer. Um, I have a ton of respect for the BA and what they do. I have a lot of great friends who work there, friends that did work there, still work there. But this fighting over the word craft, folks, it's a fool's errand, OK? As my buddy Rob Klugman used to say, that's gonna be a long walk down a real short pier, because guess what? Craft, where does it live? It lives in the mind of the consumer. And always has and always will, and a lot of ink has been spilled over that so much that it's almost become ubiquitous. There's craft burgers, there's craft sodas, and for fuck's sake, there's a real estate office in Fort Collins, that's craft real estate. I don't know what the hell they mean by that, but when you start to when the realtors start saying it's craft, I'm out, um. Alright, let's talk about cannabis for a minute. Real quickly, you guys know the shortest words spoken in Colorado these days? Here Alright, many people, myself included, we thought it would be legal by now. I really did. I felt sure that once all three chambers of government went blue, um, that they would get it done. You know, you gotta understand it already had broad support across both aisles. It was the Republicans that got the farm bill passed in the first place that legalized hemp, which opened the door for CBD. It's certainly been passing when it goes to a public vote. It's very hard to get. Uh, more than 51% of the people to agree on anything these days, but it has strong support at the ballot. Um, it's a sustainable product to produce, um, legalization further weakens the narco state on our southern border, and there's real science behind this stuff these days. It's not just CBDs, there's CBN, there's CBCs, and they're starting to be real science here. But most importantly to the politicians, and the part that's just shocked the hell out of me, frankly, is they want to do two things. They wanna get reelected, and they want easy tax dollars, and there's broad public support for this, and there's certainly easy tax dollars there. So I honestly don't know why it hasn't happened yet. The only thing I can figure out is maybe Biden's decided that his short term memory is bad enough already, and, um, and that we'll just print more money to to pay our way out of the national deficit, but stay tuned on that one, Let's talk about distributor consolidation for a second. It absolutely continues at a torrid pace. There's been over 50 deals in 2 years, uh, there's more to come. And this blurring of lines that I talked about across Bev Alc is going to continue to fuel this. Most of these large distributors already sell Coke or Pepsi or Doctor Pepper, or Snapple, or kombuchas or NA's or things like that, and folks, this is purely a mathematical and logistical exercise for them. I don't have to tell you guys this, but the distributors aren't the ones out there selling your product. You guys are. The distributors are doing nothing but distributing your product, and, you know, as Harry Shoemaker pointed out long ago, all of these types of beverages, they're heavy, they're heavy, they're hard to transport, they take up weight, they take up space, they're high touch, they have to be rotated, they have to be merchandis, and trust me, they're going, you know, they're in their rotating and merchandizing all of these products are largely going into the same accounts, so They're going to find more ways uh to do this in a more effective and economical matter, uh, economical manner, so we're gonna see more consolidation coming for sure relevant to you guys, particularly in the beer space, it could be your one chance to move distributors, so just pay attention to your local franchise laws. Let's talk about seltzer for a second. You know, seltzer was subjected to perhaps the greatest whiplash effect of all of, uh, the sectors of 2021. Uh, when you look at how we came into the beginning of the year and what people thought seltzer was gonna do and how we're closing out the end of the year. It reminds me again of a quote Jim Cook said years ago when Kraft had just been growing at double digit every year, double digit every year, and Jim said, well, it can't continue or it would all be craft, and we know that's not gonna happen, but I think at the beginning of the 2021, Seltzer had come in so strong, everybody thought, what the hell is going on here? You know, and to quote Ben Steman from Beer Marketers Insights again. He said that Seltzer in 2021, it went from revolution to reset to retrench, all in 10 months. Now, despite the slowdown, Seltzer achieved almost the same share in five years that it took craft beer 30 years and 8000 players to get to, and they got 4 brands that are still doing 90+% of the share volume there. So, I think of Seltzer. In many ways, as in this is where they start to blur these lines, right? Seltzer to me was the first better for you category, better for you sector to become a relevant category all of its own. And the reason I say that is, think about it from the consumer's point of view. A lot of people, they look at it as a replacement for a vodka soda. And they don't, if they wanna tune it up, they're gonna dump more vodka in it, and they're in control of the experience, but I think that's how the consumer thought about that, but it was a better for you and and relevant to the younger consumers these days, it was a more convenient option for them. All they had to do is pop the top. Um, as this category continues to mature, I think we're inevitably going to see diversification, uh, within it. I think we saw that with the company we represented earlier this year with Lone River Ranch Water out of Texas. For those of you who don't know, ranch water is traditionally a cocktail made in Texas with tequila, Topachico mineral water, and lime, and this this company down there started making one that was malt based. With agave, but they don't own the trademark. It's like margarita or daiquiri. You can't trademark ranch water. Well, the thing took off and went to the moon, and inside of a year they had done a deal with Diageo, and now ABI with Carbach has a ranch water and Dossey's has a ranch water and Molson Coors has done a deal with Topachico, and they're in the ranch water business. And I think that's indicative of this diversification across seltzer that we're gonna continue to see. Um, I think that's gonna have a pretty long runway. Let's talk about better for you for a minute. This is just a fascinating trend to me, because it is fundamentally different than a lot of other trends that have influenced beverage before. When you look back when cider took off, that was largely driven around a lot of uh Ain't being spilled about gluten free, right? And 100 calories is 100 calories, and gluten free is gluten free and zero sugar is zero sugar. Well, what the fuck is better for you? Better for you lives purely in the mind of the consumer, right? And that's why it is such a powerful and influential trend, and it's causing consumers to take beverage where they want it to go, because they want it when they want it, how they want it, they wanna know what it does for them, how it makes them feel, and That is a very much a qualitative function of of that thought. It's not a quantitative thing, and it is alive and well in the mind of the consumer, and I would go so far as to say that it will have a broader impact across consumer packaged goods than any trend we've seen in a very long time. Let's talk about the 9th 1 with RTDs. Now, just as I wrote this, I said this is purely an industry term, and as soon as I said that I'm having a drink with Chris Kramer last night, and I opened up the menu, and right there before my eyes it says ready to drink. It's the first time I've ever seen that printed on a menu. It's largely been a, uh, it's largely been a uh industry term like you go into a retailer and ask where the RTD section is, they look at you like they got four heads, you know? Um. But you know, these, these brands, they don't quite fit the mold, and I talked about that before and I'll use one as an example like Beatbox. Beatbox drinks like a party punch, but it's wine base. It goes from 5% to north of 10 or 11%. And the low end hits squarely in this better for you trim with zero sugar in the high end suits those consumers who don't give two shits about their health, so long as the party doesn't end. Uh, it comes in a tetra pack, so it's sustainable, and because of that, a 4 case floor sits in it, it takes up the space of an 11 by 17 sheet of paper on the floor. This is the type of crossover and cross pollination of beverage that's really gonna drive things in the next few years. Couple more and I'm about out of time here, um. When you take better for you and RTD and put those things together, I think you see rapidly splintering emerging categories and a lot of rising consumer excitement and engagement, and I think that creates opportunity. DTC. This is perhaps the biggest acceleration of any of these. Uh, it went from a nice to have to a necessity in most consumer households because of the COVID shutdown. Nowadays you can literally have anything shipped to your house. We were at my house cooking Thanksgiving dinner, my wife ran out of an herb, my 4 year old nephew sitting at the island, and pants, order it on Amazon. He's 4 years old, and he already knows that he can have it sent to his house on Amazon. This is not going away. So, where's the consumer today? Over a decade ago, there's a lot of ink spilled over Gen X, Gen Y, Gen Z, millennials, and what impact that we're gonna have on the world, the numbers of them. Today we're seeing and living through that impact every day, and it's particularly relevant in something that's in their lives as much as beverage. Like I said, they want what they want, when they want, how they want it, and if we don't give it to them, you can bet your ass that someone else will, and a lot of us are getting churned in their wake. I'm almost there. Alright, uh, in summary, I, I, I am summarizing here, I promise, um, I think we're losing our ability to predictably, uh, predictably and accurately forecast, OK? And we can't forecast, we can't run our businesses. It affects everything from the ability to order, much less pay for raw materials, meet bank covenants, decide what markets to invest in. Do you hire people, you lay people off, and unfortunately, it's not getting any easier. Back to my earlier comments, there's no return to the old folks. It's a brave new world out there. Winston Churchill said, never let a good crisis go. Waste, OK? Now, I rarely use the word never, but I have truly never seen a more exciting time in beverage, because the consumers engaged in a way that they haven't been. They wanna know what this product does for them. It creates tons of opportunity for us, and someone or something will fill those barrels that are being shut off into new categories, um, and we just have to retool and restructure our businesses, and I like to think about it through what I call the three eyes. You gotta be You gotta be have ingenuity, innovation and investment, and you'll capture those opportunities. I'm personally very excited to see how the beverage community answers the bell here, but I can promise you that the opportunity is there for the taking. Thanks for listening.

Speaker 1 [33:27] Fucking rad. Come on over. Yeah, we got this. Most of it's just walking across the stage at this point. Exactly.

JB Shireman [33:42] Yeah.

Speaker 1 [33:42] So we're seeing this blurring and it's, it's, you know, major companies, Monster looking at the space, Pepsi looking at the space, Coke looking at the space, and then we see, you know, Pepsi with its distribution, but Where do you see this going? Like, not with just with them, but are we going to see larger CPG looking to get in as well, or is that already happening?

JB Shireman [34:08] I think it's already happening. I think it's inevitable, you know, to use the old analogy, they're not gonna lose the battle for lack of shooting back, right? And they've been largely side. Line and these NA and alcoholic categories have been firewalled from one another legislatively, regulatory speaking, and as the consumer starts to play across both segments more and people have traditionally drank alcohol or drinking lower and lower alcohol beverage, no alcohol beverages, it creates opportunity, and we're a capitalistic country, and they're not gonna And they're not going to lose out on those dollars. I think it's already happening and you'll see it continue to accelerate.

Speaker 1 [34:46] Well, we've got an audience question here too. There's many international companies making US acquisitions. Are you aware of any US companies making M&A moves outside of the US? Feels like many of our larger craft companies are getting sold to non-US companies, or that's just the news we see?

JB Shireman [35:04] I think it's probably just the news that we see. I think Lion, as we were working on the Bell's transaction, they announced another deal that they had done over in Australia. We closed a deal over in India not too long ago. So I think it's happening again. We're about to open an office in the EU and have a guy there and, uh, we think there's gonna be a lot of activity there. I think it's absolutely a global thing and the trends that are being set here are going to spread. Across, across the globe. So I think we'll see more of it. It certainly hasn't been as prevalent as it is here because we're the largest and most profitable beverage market in the world. Therefore, one of the, if not the most influential, um, so we've probably seen more activity here, but we'll see more abroad as well.

Speaker 1 [35:47] One last question. Ball has instituted these higher minimums for cans. What's your expectation for how that's gonna change this landscape?

JB Shireman [35:58] You know that to be quite honest with you, I don't try and bullshit my way through things. I don't really know, you know, I think we had a lot of uh External factors influencing our supply chain and with when on premise shut down and all that keg volume, gotta remember for 21 straight weeks, total beverage alcohol grew after the shutdown with on premise completely closed down. Well, most of those were going through cans and large pack sizes, and I think we're just seeing the ripple effect of that. But I don't really know where it will shake. Out, I hear most people, you know, did everything they could to scramble to get the volume that they needed, and now they don't need as much as they did. So I think we're in for a few more unsettled times as we pull through this. Well,

Speaker 1 [36:41] I think a lot of people try to lay claim to the most interesting man, and I think you might have a good claim on that. So thanks for doing this, Jamie. Thanks,

JB Shireman [36:48] man. I appreciate it.

Speaker 1 [36:50] Thanks for having me.